WWW.OAMI.EUROPA.EU Office for Harmonization TRIPs? IP protection in China José J. IZQUIERDO IAERD (OHIM) XII EIPIN Congress 09.04.2011
Content Chinese context TRIPS as a driver for change Gaps, Challenges.Opportunities? Questions to audience
Content Chinese context
Helicopter view of the Chinese Legal System National Level: National People s Congress--Constitution Standing Committee--Laws State Council & its ministries/commissions--regulations/ directives/orders Sub-national Level: Provincial & municipal congresses and their standing committees Local Rules/ regulations Local Governments
Socialist Market Economy (art. 1 TM Law) 12th Five-Year Plan for National Economic and Social Development (FYP) (2011-2015) = approved by NPC on 16 th march 2011 inclusive growth, which means ensuring the benefits of economic growth are spread to a greater proportion of Chinese citizens key themes: rebalancing the economy ameliorating social inequality protecting the environment.
12th Five-Year Plan for National Economic and Social Development (FYP) (2011-2015) Strategic Emerging Industries (SEIs) = biotechnology, new energy, high- end equipment manufacturing, energy conservation and environmental protection, clean- energy vehicles, new materials, and next-generation IT Planned investment: RMB 4 trillion Goals: to increase SEI s contribution from today s approximately 5% of GDP to 8% (2015) and 15% (2020) Encouraging foreign business participation in SEI development Risk: indigenous innovation policies
Development of China s Intellectual Property System China is a nation with the tradition of innovations and creations: Four Ancient Chinese Grand Inventions: Paper Manufacturing Movable-Type Printing Gun Powder Navigation Compass Before 1980 s, no systematic IP legislation nor IP administrative authorities existed Argument on whether IP system should be established - transition from planned economy to market economy Dec. 1978: Reform and opening = 改革开放
Development of China s Intellectual Property System Trademark law -Into effect on March 1, 1983, amended respectively in 1993 and 2001, currently under review Patent law -In force on April 1, 1985, amended in 1992, 2000 & 2010 Copyright law -Enforced in September 7, 1990, amended in 2001
Development of China s Intellectual Property System Other IP Related Legislation: 1991: Regulation on Computer Software Protection 1993: Anti-Unfair Competition Law 1995: Regulation of Customs on Protection of IPRs 1998: Regulation for Protection of Plant Varieties 2001: Regulation for Protection of Layout-design of Integrated Circuits Amendment on General Principles of Civil Code (Art.94 and 118) Criminal Law (Sec. 7 of Chapter 3)
2001-2004: - Focus on laws, not on robust enforcement - Defensive international posture - Tension within the government agencies in China 2004-2007: - More attention paid to enforcement - US files WTO case against China (DS362) 2007-Present: - Focus on Innovation in China - Move from Made in China to Invented in China - National Intellectual Property Strategy is Adopted - WTO case decided (March 2009) - Patent Law revised & TM law to be revised Development of China s Intellectual Property System
Administrative Bodies 1.Patent Office of the State IP Office (SIPO) patent & designs 2.National Copyright Administration copyright policy making 3.Trade Mark Office under the State Administration for Industry and Commerce (SAIC) trademark registration, anti-unfair-competition, protection of trade secrets. 4.State Drug Administration protection of pharmaceuticals 5.General administration of Customs enforce IP owners rights against infringing goods 6.Ministry of Information Industry protection of layout designs and integrated circuits. 7.SAIC and the State General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) combating counterfeiting.
IPR remedies for enforcement Three Track System: A) Administrative acts over trademark infringement by AICs: Trademark supervision B) Civil courts: review of administrative actions, and civil cases C) Criminal courts Plus, Customs authorities
International obligations Major International Treaties China Accessed to 1980: member of WIPO 1985: Paris Convention 1989 & 1995: Madrid Agreement and the Protocol 1992: Berne Convention 1992: Universal Copyright Convention 1993: Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of Their Phonograms 1994: Patent Cooperation Treaty(PCT) 1999: UPOV 2001: WTO TRIPs Agreement
Content TRIPS as a driver for change
TRIPS as a driver for change Accession Date: 11 December 2001 TRIPS compliance reforms: National level: over 3750 laws and regulations enacted or amended Sub-national level: 31 provinces and autonomous regions and 49 major cities repealed nearly 500 trade-related measures/rules and amended almost 200 Source: MOFCOM
TRIPS as a driver for change For IPR, accession meant: Thorough reform of IP laws TRIPs keeps China accountable: Dispute settlement mechanism Trade review mechanism
TRIPS as a driver for change Disputes: 20.03.09 (China - Measures Affecting the Protection and Enforcement of Intellectual Property Rights (WT/DS362)
TRIPS as a driver for change Disputes
TRIPS as a driver for change Disputes
TRIPS as a driver for change Disputes
TRIPS as a driver for change Disputes 15.04.09: China informed the DSB of its intention to implement the report 26.02.10: 11 TH National People's Congress amended the Copyright Law 17.03.10: the State Council adopted the decision to revise the Regulations for Customs Protection of Intellectual Property Rights.
TRIPS as a driver for change Trade review: June 2010: 3rd Policy Review: China increasingly aware of the importance of intellectual property rights protection in facilitating innovation in the economy. China s revised patent law raised fines and legal compensation for cases of misleading assertion of patent rights, the increase in innovation will undoubtedly contribute to increased awareness of the need to protect IP rights
TRIPS as a driver for change Trade review: June 2010: 3rd Policy Review: 1508 questions received by China a staggering number according to WTO officials about 230 came from the EU, 140 from the US, and 150 from Japan EU: although acknowledging China s efforts to effectively protect IP rights remained concerned that enforcement remains insufficient, notably in regional and local levels, and deficiencies and obstacles in solving complaints persist
Q: Has the extension of IP in China assisted to achieve economic and social development? Guobing Shen, Nominal level and actual strength of China's intellectual property protection under TRIPS agreement, Journal of Chinese Economic and Foreign Trade Studies, 2010, vol. 3, issue 1, pages 71-88
Guobing Shen Study WTO = big turning point for nominal IP protection Nominal Level of IP gradually increasing since 2001 (TRIPS) Highest nominal IP level ever Strengthening of China s implementation of IP is increasing steadily lack of synchronous alignment between law and application Economic development, rule of law and implementation important factors for achieving actual protection strength The degree of perfection of the law is not a determining factor for success The promotion of the implementation will be more helpful for stronger actual protection Reinforcement of China s actual protection is beneficial to promoting provincial economic growth However, at the outset of building an independent innovation nation, too strong IP protection is harmful to the development of innovation capabilities and harmful to provincial growth
Guobing Shen Study Recommendations: The level of IP is required to be compatible with the level of specific economic development: China needs to emphasize the promotion of actual protection to stimulate domestic innovation and growth China could seek an endogenous benefit balance between a strong IP and economic development China could improve public propaganda of IP system, the rule of law and training China needs to specify the rights and responsibilities of enforcement Chinese local governments need to coordinate these aims into their local policies
Content Gaps, Challenges.Opportunities?
Challenges Faced by China
Challenges Faced by China Challenges as perceived by the Chinese: Short experience in IP implementation Large population to be educated for respect and protection of IPRs Fast growth of the economy while phenomena of IP infringement still exist -China is still in the process of industrialization with more than 50% rural population -The annual GDP per personal is only $1700 Economic model needs to be changed to innovation-based from relying on cheap labor and large consumption of natural resources Information service and administration need to be improved: patent information, examination time, etc.
National IP Strategy June 2008 Goal: China to become a world leader in innovation by 2020 Coordination: 33 Departments in the Chinese Government were involved in the negotiation of the Strategy Architects: Vice Minister Wu Yi (retired) and Tian Lipu, Commissioner of the State Intellectual Property Office
National IP Strategy June 2008 (6) By 2020, China will become a country with a comparatively high level in terms of the creation, utilization, protection and administration of IPRs. The legal environment for IPRs is much better, market entities are much better at the creation, utilization, protection and administration of IPRs, the public awareness of intellectual property is increased greatly, the quality and quantity of the self-relied intellectual property are able to effectively support the effort to make China an innovative country, the role of the intellectual property system in promoting economic development, the culture prosperity and social progress in China become very apparent.
National IP Strategy June 2008 (21) Protect the lawful rights and interests of trademark holders and consumers effectively. Strengthen our capacity to enforce the law and take strict measures for curbing counterfeiting and other infringements to maintain fair competition and good order in the market. (22) Support enterprises in carrying out their trademark strategies and encourage them to utilize their own trademarks in business activities. Enterprises should be encouraged to enrich the meaning of their trademarks, increase the added value and improve the reputation of their trademarks, and establish their well-known trademarks. Enterprises should also be encouraged to register their trademarks overseas, to protect rights and interests in their trademarks, and to participate in international competition.
National IP Strategy June 2008 (23) Make full use of trademarks in the industrialization of agriculture. Market entities need to be helped to register and use their trademarks to improve the quality of their farm products, ensure food safety and raise the added value of their farm products and their competitiveness on the market. (24) Enhance the administration of trademarks. Efficiency of trademark examination needs to be improved, the time for examination needs to be shortened, and the quality of examination needs to be improved. Market rules need to be respected, and issues related to the determination of well-known trademarks, famous trademarks, well-known commodities, famous-brand products and high quality brands need to be truly solved.
Main Contents of China s National IP Strategy Vision Guiding Principles Strategic Goals Strategic Focuses Specific Tasks Key Measures
Guiding principles Advocate innovation Utilize IP effectively Protect IP according to law Manage IP in a scientific way
Strategic Objectives Strategic objectives in the five years to come Strategic objectives by 2020
Objectives for the Next Five Years Higher level of self-relied intellectual property Greater quantity of intellectual property, higher quality Significant Increase in benefits of utilizing IPRs Significant growth of the proportion of products rich in IPR Significant improvement of the protection of IPRs Great enhancement of awareness of the IPRs in society, especially among market entities Basic formation of a favorable intellectual property culture
Specific Tasks Patent Trademark Copyright Trade secret New Varieties of Plants Intellectual Property in Specific Areas IPR Related to National Defense
Key Measures Increasing the Capacity to Create Intellectual Property Encouraging the Commercialization and Utilization of IPR Expediting the Development of the Legal System for Intellectual Property Improving Intellectual Property Law Enforcement Strengthening the Administration of Intellectual Property Developing Intermediary Services for IPR Developing Intellectual Property Human Resources Promoting the Cultivation of an Intellectual Property Culture Expanding International Exchanges and Cooperation in Intellectual Property
Implementation Inter-Ministerial Commission leading role: SIPO Commissioner Tian Lipu National Patent Development Strategy (2011-2020) 2 Mio. = China s goal for annual patent filings by 2015 (including utility-models) Increase of number of patent examiners, to 9000, by 2015. (USPTO = 6300; EPO = 4500) Double the number of patents of Chinese residents in other countries Recent Chinese filings in US: solar and wind energy, information technology and telecommunications, and battery and manufacturing technologies for automobiles Incentives: cash bonuses, better housing for individual filers and tax breaks for companies that are prolific patent producers October 2010 Thomson Reuters research report: China would surpass the United States in patent filings in 2011
Implementation National TM Development Strategy
Challenges Faced by China Challenges as perceived by the others : Complex issues need still to be legally dealt with Public Health Genetic resources Indigenous innovation, etc. Enforcement of legal framework and rights Weak
Challenges Faced by China
TRIPS issues TRIPS & Public Health: China s NPC approved the revision of the TRIPS in November 2007 New Provisions in the newly revised Chinese Patent Law Art. 50 (compulsory license) TRIPS & genetic resources & traditional knowledge: fully supports the Objectives of the Convention on Bio-Diversity Art. 5 Patent Law Art. 26.5 Patent Law
TRIPS issues TRIPS & indigenous innovation: 2006: Medium- to Long-Term Plan for the Development of Science and Technology: indigenous innovation policies The Chinese government s focus on indigenous innovation has spurred a boom in patenting by Chinese inventors. Although filings of all types of patents in China are on the rise, Chinese inventors particularly focus on utility model and design patents U.S. and other foreign inventors almost completely ignore such patents Utility model and design patents are inexpensive and easy to obtain, as they are not substantively examined by patent examiners. Once a Chinese company has received such a patent, it can bring suit against foreign companies that manufacture similar goods in China or export them to China, or use the patent to defend against infringement allegations. Some utility model patents obtained by Chinese firms are alleged to be opportunistic and predatory. (Source: United States International Trade Commission)
Evolution of filings before SIPO 2001-2010 Source: State Intellectual Property Office of the People s Republic of China, March 2011 49
TRIPS issues TRIPS & indigenous innovation: Art. 20 patent Law: mandatory advance confidentiality examination before filing abroad for inventions completed in China Draft Circular Regarding the Launch of the National Indigenous Innovation Production Accreditation Work for 2010 (April 2010): whereas Circular 618 required the entity to own the relevant patent(s) and trademark(s), the Draft Circular only requires the entity to have a lawful right to use such IPRs (e.g. license) National Brand Electric Vehicles Plan Raises Worries For U.S. Industry: A new Chinese automotive trade policy directive expected to be published soon requires that by 2015, all new electrical vehicles made by foreign automakers in China must be "national brands" that belong to the joint ventures that foreign firms are required to set up with Chinese state-owned enterprises, according to industry sources. (source: Inside U.S. Trade March 11, 2011)
TRIPS issues TRIPS & enforcement: China India statement before TRIPs Council on 8 th June 2010 We attach huge concerns on the so called TRIPS plus enforcement trend and the implications it may bring about. Chinese perception of TRIPs plus: Potential legal conflicts and unpredictability: TRIPs plus provision may possibly violate the provisions of TRIPS Brazil and India cases against the EU and one Member State on its Custom Regulation and on seizure of transit goods Possible distortion of legitimate trade: how extensive protection may cause a problem to legitimate trade. Systematic concern due to upsetting the balance: the unilateral increasing of the level of protection will break delicate balances, and cause systematic concerns over international trade relations. Concern on the allocation of public resources
TRIPs issues Chinese proposal in TRIPs Council: The IP chapter or provisions of any RTA, FTA and regional IP Agreement to which a WTO Member is a party, shall not be inconsistent with the TRIPs Agreement. The enforcement of IPRs by a member in any bilateral, plurilateral or regional trade agreement shall not create distortions and impediments to legitimate international trade. Members should be free to determine the appropriate allocation of public enforcement resources within their own legal system and practice to enforce and protect IPRs and the autonomy of WTO Members in this regard shall not be restricted or burdened in any plurilateral, regional and bilateral trade agreement to which a WTO member is a party.
TRIPs issues Chinese ambassador statement: It is not because of lack of harsh enforcement standards or that there are not enough policeman that is causing pirating, counterfeiting or other forms of infringement of IPR. The Chinese ancient philosopher Lao Zi used to say, The more the criminal codes, the more the stealers. Actually, IPR infringement is largely a problem during the development phase. Therefore the lack of development is where the crux of the problem is. If people fail to address the root causes while beating around the bush, things will not get better.
Content Questions to audience
For the audience Question No. 1: Chinese attitude towards TRIPS plus & ACTA: should the EU learn a lesson from it? Patent enforcement in or out of ACTA? Question No. 2: WTO resolution on US-CHINA dispute: does China respect TRIPs? Who wins? Question No. 3: How to approach indigenous innovation policies related to IPR? Is there a strategy for foreigners to overcome national brands requirements? Question No. 4: China seen as the land of bad faith trade mark filings and poor quality design applications? Did the Amended Patent Law solve to soften this? Will the upcoming TM law reform help?
Reading hint Want to deepen your knowledge? United States International Trade Commission, China: Intellectual Property Infringement, Indigenous Innovation Policies, and Frameworks for Measuring the Effects on the U.S. Economy, Nov. 2010 ( http://www.usitc.gov/publications/332/pub4199.pdf Guobing Shen, Nominal level and actual strength of China s intellectual property protection under TRIPS agreement, Journal of Chinese Economic and Foreign Trade Studies, 2010, vol. 3, issue 1, pages 71-88 Paul Torremans et al., Intellectual Property and TRIPs compliance in China: Chinese and European perspectives, Edward Elgar Publ.. Ltd, 2007 APCO, China s 12th Five-Year Plan - How it actually works and what s in store for the next five years, 10 December 2010 (http://www.apcoworldwide.com/content/pdfs/chinas_12th_five-year_plan.pdf ) SIPO, National Patent Development Strategy (2011-2020) http://graphics8.nytimes.com/packages/pdf/business/siponatpatentdevstrategy.pdf )
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